Large law firms are starting to resemble corporate entities, however, there is some variation in management styles. Take a few pointers from the business world by clearly defining the roles of your leaders, facilitating effective communication and sorting out management issues.

In press reports about a potential, and ultimately unconsummated, merger between two high-profile law firms, a startling fact emerged: the managing partner of one firm logged 3,300 billable hours in the most recent calendar year, while the managing partner of the other had not practiced law in over a decade. The difference in management cultures may not have spelled the end of the merger, but it does point out that many law firms continue to manage themselves differently from other business organizations. Lee Iacocca stopped designing cars when he moved into top management of Ford and then Chrysler. The head coach of a championship football team can't fill that role and be both offensive and defensive coordinator. Are law firms truly that different from either of these examples?

Pluses and Minuses

There are certainly pros and cons to law firm leaders having active law practices. On the plus side, lawyers certainly respect other good lawyers as proven by their practice accomplishments. Active practice keeps a law firm leader in touch with clients and their business needs, and reinforces the message that law is a profession that remains central to the life of every lawyer. On the minus side, of course, are the important leadership issues that active practice draws time away from: strategic planning, recruiting, organizational development, etc.

Whether or not the CEO wishes to remain in practice, there is the issue of how much authority the person in that position should have. Former General Electric chairman Jack Welch maintains that all companies (including law firms) operate best with managerial clarity, when there is no doubt as to who is the leader. He believes the board of directors or management committee should select the best CEO possible, monitor progress toward organizational goals, and replace the CEO if goals are not met. Certainly in normal circumstances, failure to support the leader creates schisms that lead to poor performance. In larger law firms today, one finds management efforts being split. There may be a COO (usually a non-lawyer), a CEO-Managing Partner (and Chair of the Management Committee), and then sometimes a Chairman of the Board (usually a former CEO-Managing Partner). If the Chairman of the Board is an “emeritus” position or a position with specifically designated responsibilities, this division can work well. However, if there is the expectation that the CEO is the primary leader while there is another ego-bound lawyer acting in a leadership role as Chairman who conflicts with the CEO, the firm can only have chaos and difficulty.

Professional Responsibility

In matters of governance, a lawyer’s responsibility for his or her own firm is magnified by the requirements of the profession’s rules of professional conduct. These often extend well beyond the basics of individual ethical practice. In my home state of California, for example, State Bar Rule 5.1 provides that partners and other lawyers with managerial authority in a law firm must take reasonable measures to ensure that all lawyers in the firm conform to the Rules of Professional Conduct. The rule further provides that lawyers who have managerial responsibility within a firm are personally responsible when other lawyers in the firm violate the Rules.

This is a heavy burden. In “eat what you kill” law firms, most of the lawyers fail to pay attention to management issues. They tend to be focused only on rainmaking and their own billable hours. This leaves a lot of room for error by others … and personal responsibility for the firm leader. It opens up a whole range of issues on how the firm allocates new work. Who makes the assignments and why – on the basis of skill, availability or favoritism? Does the firm work to ensure that lawyers, especially younger ones, are adequately trained for the work they receive? The answers can determine whether the firm’s leadership is fulfilling its responsibilities to prevent a governance or malpractice crisis.

Role of the Administrator

Often law firms have senior law firm administrators, such as Executive Directors and Chief Operating Officers who are responsible for accounting, human resources and similar functions. Often such a person will report to a senior lawyer in the firm – such as the CEO or the Managing Partner – but the reporting relationship may be less than ideal. Most lawyers/law firms as employers act on the premise that all non-lawyer administrators, including such senior managers as the Executive Director or COO, are servants to the law, and that diminishes the senior administrator’s effectiveness. There should be two prerequisites defining the senior administrator’s role in order for the firm to get the most benefit from a senior manager:

A written statement defining the administrator’s lines of reporting and communication, and the method for evaluating the administrator’s effectiveness. If there are certain organizational criteria for success (e.g., profits per partner, revenue growth, number of clients, and/or others), it must be clear which ones are considered to be within the administrator’s control, and which ones are not.

A clear understanding of organizational roles and responsibilities. Typically this should mean that the senior administrator is responsible for profits, organization and efficiency, while senior lawyers – whether individually as Managing Partner or CEO, or collectively as an Executive or Management Committee – are responsible for the strategy and future growth of the firm (including generating both the zeal for and ability to reach increased revenues).

Importance of Communication

In many of today’s geographically diverse megafirms, partners are that in name only. As the governance of these large firms has fallen to a very fewin the organization, the remaining partners often have little interaction outside their own practice areas. No matter what the size of the firm, unless there is continuous open and candid communication among equity partners, and acceptance and buy-in for the business plan chosen by the firm, sooner or later there will be a dissolution of the firm. The form of the dissolution is irrelevant, whether by withdrawal of individual partners or wholesale departure and formal liquidation. The end result will be the same: The original dream of harmonious and collegial growth of the firm will come to an end.

The most important function of all law firm leadership is to facilitate continuous communication to ensure that individual agendas continue to be attuned with one another. In divorce practice, lawyers frequently hear the complaint that “we grew apart.” This results from the failure to keep communications open and candid as time passes. Law firms, small and large, are subject to the same need to keep the communication process open, candid and frequent. The primary rainmakers of the firm, the management and managing partner all must be in concert, and all members of the firm must buy in. That is the true challenge of leadership.

Defined Roles

The organization structure of any law firm should be considered carefully and changed to meet today’s sophisticated patterns of skills and needs to sustain a larger law firm. No longer can the law firm, spread out across the country, and now the world, operate in the same consensus, collegial fashion it did years ago. Today, the larger law firm is a corporate entity that must have clearly defined roles of leadership – for lawyer managers and for professional administrators. Failure to operate in this way merely causes poor economic results and unhappy lawyers. If all members of the firm are not clear about the overall goals as well as specific objectives and strategies, there is no real firm leadership – and ultimately there may be no firm.